Broker Check

Where Are The Fact Checkers?

| April 22, 2022

 We all have grown accustomed to the term of "Fact Checkers" or "Fact Check."  Many of the social platforms now do some form of it, and whether you happen to agree with their facts on particular events or other's posts is a blog for a different day.  But many people rely on them and you see various forms of their disclaimers saying this is false or mostly false.  I can remember when news organizations made it their mission to ferret out the truth to bring you news you could believe.  Lots has changed in the digital information age.

One of the things that I never see "fact checked" are the many posts, stories or advertisements about social security.  It has to be one of the most maligned government programs ever.  The stories or claims about its solvency have been around for years.  It seems that much of this comes from people selling you fear.  They want you to buy into their version of  fear so that they can sell you their product or solution.  Where are the fact checkers? 

The following is taken directly from the Social Security Trust Fund FAQ's:

In the annual Trustees Report, projections are made under three alternative sets of economic, demographic, and programmatic assumptions. Under one of these sets (labeled "Low Cost") the trust funds remain solvent for the next 75 years. Under the other two sets (the "Intermediate" and "High Cost"), the trust fund reserves become depleted within the next 20 years. The intermediate assumptions reflect the Trustees' best estimate of future experience.

Some benefits could be paid even if the trust fund reserves are depleted. For example, under the intermediate assumptions, annual income to the trust funds is projected to equal about seventy-nine percent of program cost once the trust fund reserves become depleted. If no legislation has been enacted to restore long-term solvency by that time, about three-quarters of scheduled benefits could be paid in each year thereafter.

The funding gap can be solved in a number of different ways.  Below is some of the proposed changes and the expected savings:

  • Increase the amount of earnings subject to the Social Security payroll tax (currently at $127,000).
    • Increase the tax base so that 90% of earnings are covered (savings:  29%)
    • Subject all earnings to the Social Security payroll tax (savings 7%)
  • Increase the payroll tax rate on employers and employees (traditionally 6.2% each)
    • Increase to 6.5% (savings 20%)
    • Increase to 7.2% (savings: 55%)
  • Impose the payroll tax on contributions to salary reduction plans, such as 401(k) plans (savings: 10%)
  • Include newly hired state and local government workers in Social Security (savings: 6%)

In 1983 The Social Security Amendments were passed (H.R. 1900, Public Law 98-21) The two provisions are an increase in the retirement age that can first affect individuals retiring in 2000 and an increase in the delayed retirement credit for those who work beyond full retirement age.  Politicians in 1983 were wary of suffering the public wrath by raising taxes.  How things have changed today.

The reality is Social Security will account for about a third of your retirement income and will be around for a very long time.  Clients that have us do financial/retirement plans get to see in real time some of the strategies that can be deployed to increase their income and save on their taxes.  If you are interested in finding out how you can make the most of your Social Security benefits, give us a call!


Mike Mickels is the President of CochranMickels Retirement Specialists and an avid sporting clay competitor. CochranMickels Retirement Specialists provides personalized planning and investment services to individuals approaching and in retirement. They also provide retirement and benefits training to Federal employees

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc, a Registered Investment Advisor. CochranMickels and Cambridge are not affiliated.